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General country information

Portugal, bordered to the north and east by Spain and to the west and south by the Atlantic Ocean, is a full member of the EU. The country is mountainous north of the Tagus River, with plains to the south. Offshore its territories include Madeira, and the Azores.

Summers are hot and dry, winters are relatively wet with most rain falling in November and December.

Portugal has a diversified and increasingly service based economy which is now substantially privatised. Although Portugal is relatively poor by western European standards, economic growth has been above the EU average for much of the past decade although it fell back between 2001 and 2003. The latest OECD assessment is that the economy emerged from recession in 2004, driven by exports and private domestic demand. Real GDP growth is expected to pick up and reach 2.75 per cent in 2006. Inflation should remain low.

Like the economy, the property market saw a downturn in 2001and 2002. But the Royal Institution of Chartered Surveyor’s European Housing Review 2005 reports that ‘since 2003 the housing market seems to have been leading economy out of recession with rises in prices – up by 10 per cent in 2003, followed by a more moderate 7 per cent forecast for 2004’. RICS concludes that ‘the prognosis is good for 2005’.

Portugal has a land registry system that records ownership of property and any encumbrances or charges.

As in Italy, property transactions usually entail a preliminary (promissory) contract stage at which the buyer pays a deposit. Completion has to be formalised before a notary. The notary will have checked that the documentation is in order and will provide a copy of the entry in his official books as proof of purchase.

It is at this stage that settlement of the purchase price, legal fees and transfer taxes will be required. Transfer taxes are based on the value of the property and have a starting threshold of about £56,000. Thereafter they range from 2 per cent to 8 per cent of value, the higher figure applying to properties valued in excess of about £350,000.

Estate agents fees are usually paid by the seller but this means estate agents, who are state licensed, work on behalf od the seller rather than the buyer.

It used to be that buying property through a company brought capital gains tax and inheritance tax benefits, but these rules are being changed and in some instances buying through offshore companies will in future be detrimental to investors’ tax positions.

Income tax is also be levied on properties owned by non-Portuguese based on the value of the property whether or not it is rented out.

Country information - Portugal

Area: 90,000 sq km Population: 10.5m (July 2004 est.) Principal cities: Lisbon, Faro Median age of population: total: 37.9 years male: 35.8 years female: 40 years (2004 est.) Language: Portuguese Employment rate: 93.6% Flying time from UK: Lisbon 2.5hrs Faro - 4.4hrs Currency: euro (EUR) Time difference from UK: Lisbon No UTC/ GMT offset Rate of inflation: 3.3% (2003 est.) International dialling code: +351 GDP per person: $18,000 Climate: Maritime temperate; cool and rainy in north, warmer and drier in south

Useful websites:

Government Agency Tourist office